2022 (11) TMI 1095

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....ned order dated 27.10.2020 passed by the 'National Company Law Tribunal, Bench -V, New Delhi (the Adjudicating Authority) in C.P (IB) No. 1874/(ND)/2019 (IA -3642 & 3790 of 2020). 2. In Appeal No. i.e. CA (AT) (Ins) No. 1104 of 2022, the Appellant Bank has sought following reliefs: Allow the present cross Appeal and set aside the observation of the Adjudicating Authority to the extent that the Guarantee Agreement is in contravention of Section 185 & 186 of the Companies Act, 2013 as stated in the impugned order dated 27.10.2020 passed by the National Company Law Tribunal, New Delhi in IA No. 3642 of 2020 and IA No. 3790 of 2020 in CP No. (IB) 1874/ND/2019 and grant the necessary reliefs to the Appellant in terms of the aforesaid IA No. 3790 of 2020 in CP (IB) No. 1874/ND/2019 and Costs incidental to this Appeal etc. 3. In Appeal No. CA (AT) (Ins) No. 1003 of 2020, the Resolution Professional/now Liquidator of Corporate Debtor (CD) /Sarveshwar Creations Pvt. Ltd has sought the following reliefs: Allow the present Appeal and set aside to the aforesaid extent, the impugned order dated 27.10.2020 passed by the National Company Law Tribunal, New Delhi in....

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....td. of Rs. 337 Lakh & liquidation process has commenced so the Bank is fearing that they should not sell the property and utilise the amount for payment to other creditors. The Ld. Sr. counsel has also stated that this property is standing as a guarantee to the credit limits sanctioned to M/s. Seen India Pvt. Ltd. (Holding Company of CD [principal Debtor]). The Appellant also took us through various sanction letter of credit facilities from time to time by the Bank as appearing: at Annexure -2 dated 01.02.2013 page 86 of the Appeal paper book, various limit sanctioned appearing at page 87 - various security created, extract of various Board Meeting appearing at Annexure -2, Board Resolution Passed by CD on 02.02.2013 appearing at Annexure 4, Guarantee Agreement appearing at Annexure -5 page 93 of the appeal paper book, Credit sanction intimation appearing at Annexure -6 page 100 of the Appeal Paper Book, Board Resolution dated 20.06.2013 and Corporate Guarantee dated 28.06.2013 appearing at page 115 Annexure -7, Sanction letter dated 05.12.2013 appearing at page 123 Annexure -8, Board Resolution dated 09.12.2013 appearing at page 129, Annexure - 9, Sanction letter dated 31.03.2017 ....

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....picted herein below: "Substituted by Act 1 of 2018, S.61, for S.185 (w.e.f.07.05.2018). Prior to its substation S.185 read as under - "185- Loan to Directors, etc (1)- Save as otherwise provided in this Act, no company shall, directly or indirectly, advance any loan, including any loan represented by a book debt, to any of its directors or to any other person in whom the Director is interested or give any guarantee or provide any security in connection with any loan taken by him or such other person: (a) The giving of any loan to a managing or whole-time director- (i) As a part of the conditions of service extended by the company to all its employees; or (ii) Pursuant to any scheme approved by the members by a special resolution; or (b) A company which in the ordinary course of its business provides loans or gives guarantees or securities for the due repayment of any loan and in respect of such loans an interest is charged at a rate not less than the bank rate declared by the Reserve Bank of India; (c) Any loan made by a holding company to its wholly owned subsidiary company or any guarantee given or security provided by a holdi....

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....m the borrower. k. It is also very much clear that the second Deed of Guarantee executed on 06.05.2017 is not in continuation of earlier deed of guarantee dated 28.06.2013 as elaborately explained in para 74 of the impugned order. l. As far as the issue of contravention of provision of Section 185 of the Act prevailing as on that date (pre -07.05.2018 amendment to the Act) is concerned, it is very much clear that this is the provision which the company has to comply internally and if they fail to comply the necessary punishment is available in the same section i.e. Section 185, both monetary penalty and /or imprisonment. As far as bank is concerned, they have been provided time to time the Board Resolution showing the approval of the Board. Hence, if there is any irregularity then for that the Members of the Board are responsible. If the official of the bank have committed some irregularity, then it is the Bank who has to prosecute these officers against the provisions laid down under the law applicable to them. Bank is required to investigate internally. However, as far as the public fund with the public sector bank is concerned, the "Doctrine of Indoor Managemen....

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....eposit of title deeds for the amount of Rs.3679.00/- Plot No 58, Block- B, Sector-63, Noida (page 139 to 141) 14.10.2016 Letter for regularization of dues by bank mentions non-compliance of section 185 & 186 (Page 158-160) relevant page 159 31.03.2017 Facilities were reviewed vide sanction letter reference no. CDS:CSI:GLN:HLCC: 85:2016-17 dated 31/03/2017. That by virtue of the said sanction the facilities were reduced/reviewed to Rs. 3007.85 Lakhs (Rupees Thirty Crores seven lakhs Eighty Five Thousand Only). (Page 142-147) a. Enhancement of CMTSC Limit from Rs. 3 crores to 4 crores. b. Approval of deviation in respect in respect of reduction in margin under CMTSC Scheme from 50% to 38%. c. Sanction of cash credit limit of 5 crores (in lieu of the existing WCDL of Rs. 5 Crores) d. The action of Branch in extending the time period for realization of 2 export bills aggregating Rs. 1.01 crores upto 07.03.2017 and 25.03.2017 respectively be and is hereby confirmed. Branch extended the tenor of PCL sanctioned upto 360 days from the date of sanction the value of which was Rs. 355.00 Lakhs (Page 146) 06.05.2017 Board Resolution of C....